Why this top broker is betting on the Jumbo share price rising 25%

Jumbo shares could be great value according to Morgans…

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The Jumbo Interactive Ltd (ASX: JIN) share price is falling with the market on Thursday.

In afternoon trade, the lottery ticket seller’s shares are down 1% to $14.62.

This means the Jumbo share price has now lost a quarter of its value in 2022.

Should investors be betting on the Jumbo share price?

The good news for shareholders is that one leading broker believes Jumbo’s shares can rebound strongly from current levels.

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on the company’s shares to $18.30.

Based on the current Jumbo share price, this implies potential upside of 25% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends of 44 cents per share in FY 2022 and 46 cents per share in FY 2023. This means that if you include the forecast dividends over the next 12 months, the total potential return stretches to over 28%.

What did the broker say?

Morgans came away from Jumbo’s investor forum feeling confident in its growth opportunities.

The broker notes that these include the “expansion of its SaaS business in the profitable charity sector, as well as medium-term penetration of the large US iLottery market.”

Overall, its analysts believe their “positive view on the investment prospects of JIN was reinforced and we reiterate an ADD rating.”

It concluded:

We reiterate our ADD rating. We believe JIN offers excellent strategic growth opportunities, both in Australia and overseas, supported by a steadily expanding domestic market for digital lottery retailing. The business is cash generative and has a low requirement for ongoing capex.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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